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Stock Split Definition

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Stock Split

Whenever a company believes that the price per share of its stock has risen to a point where investors may erroneously perceive it as expensive, they will split the stock, reducing the price but increasing the number of shares outstanding.
For example, if Joe Bloggs inc. trades at 60 a share with 3 million shares outstanding and decides to split its stock two-for-one, this means that each share will now trade at 30 but there will be 6 million shares outstanding.

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